2008 (3) TMI 120 - HC - Income Tax

Transfer of Commissioner (Appeals) transferred commissioner could not hear the appeal because he lacks lawful authority after transfer - even if order of Commissioner (A) has been acted upon authorities can t be deprived of his right of appeal u/s 253(2) to file appeal because right of appeal is one thing & compliance with the order against which appeal is filed is another thing appeal filed (by revenue) within 2 months of receipt of order is not barred assessee appeal dismissed

Summary

Issues Involved:
1. Whether the appeal filed before the Tribunal was barred by time.
2. Whether the respondents had the right to challenge the order of the Commissioner of Income-tax (Appeals) after complying with it.
3. Whether the order passed by the then Commissioner of Income-tax (Appeals) could be set aside due to his transfer and the applicability of the doctrine of de facto.

Detailed Analysis:

1. Whether the appeal filed before the Tribunal was barred by time:
The appellant contended that the appeal filed before the Tribunal was barred by time as the order dated October 3, 2006, by the Commissioner of Income-tax (Appeals) was received by the assessing authority before November 14, 2006, and the appeal was filed on January 12, 2007. However, the court clarified that under section 253(3) of the Income-tax Act, 1961, the limitation period starts from the date the order is communicated to the Commissioner of Income-tax, not the assessing authority. The respondents demonstrated that the order was communicated to the Commissioner on November 17, 2006, making the appeal within the permissible time frame. The appellant's computation of the limitation period from the date of communication to the Assessing Authority was erroneous. Hence, the appeal was not barred by time.

2. Whether the respondents had the right to challenge the order of the Commissioner of Income-tax (Appeals) after complying with it:
The appellant argued that since the assessing authority issued a revised demand on November 14, 2006, and the assessee complied by depositing the amount, the respondents could not challenge the order. The court dismissed this argument, stating that the right of appeal under section 253 is vested in both the assessee and the Commissioner of Income-tax. Compliance with the order does not preclude the Commissioner from exercising the right to appeal. The statutory right of appeal cannot be negated merely because the order was complied with by a subordinate authority. Therefore, the respondents retained the right to challenge the order.

3. Whether the order passed by the then Commissioner of Income-tax (Appeals) could be set aside due to his transfer and the applicability of the doctrine of de facto:
The appellant contended that the transfer of Sri R. K. Jain did not affect his jurisdiction to decide pending appeals, invoking the doctrine of de facto. The court examined the circumstances and found that Sri R. K. Jain was transferred on May 31, 2006, and his representation against the transfer was rejected on September 22, 2006. Sri Aseem Kumar assumed charge on September 25, 2006. Despite a status quo order from the CAT on September 27, 2006, the court found that Sri R. K. Jain was not legally holding the office of Commissioner of Income-tax (Appeals) on October 3, 2006, when he passed the order. The doctrine of de facto, which applies to judges holding office under color of lawful authority, was not applicable as Sri R. K. Jain had no lawful authority post-transfer. Therefore, the order passed by him was without jurisdiction and invalid.

Additional Observations:
The court expressed displeasure at the conduct of senior authorities in the Department, suggesting that the Finance Department and the Central Board of Direct Taxes should frame policies to avoid such situations in the future. A copy of the judgment was directed to be communicated to the Secretary, Ministry of Finance, and the Central Board of Direct Taxes for necessary actions.

Conclusion:
The appeals were dismissed as the court found no merit in the arguments presented. There was no order as to costs.